How the industry can prevent 'greenwash' on ethical investing

What does 'ethical' investing mean?

Anna Fedorova
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Investment Week news editor Anna Fedorova
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Investment Week news editor Anna Fedorova

Despite the growing popularity of responsible investing in the UK, it appears both investors and fund providers have not yet gained a firm grasp of what the word 'ethical' really means in terms of investment.

According to Eurosif, the ethical and environmental funds market in the UK reached £1.5trn in 2016, but a report from Castlefield published last week - Winners and Spinners - highlighted a number of funds it says are 'ethical' in name alone, while in reality they represent simple "greenwash". Among them were the €588m Vanguard SRI European Stock fund, £151m Aberdeen Ethical World Equity and £209m Friends Life Stewardship fund, all of which invest in oil and mining giants Royal Dutch Shell and Rio Tinto. The ethical advisory business went as far as to call Vanguard's passive vehicle a ...

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